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Home Working & Business Expenses

Working from home - are we loving or loathing it? Covid-19 has made remote working become the new normal. Whether you’re working as a sole trader from your house or you’re looking at the long-term possibilities of remote working as a limited company, business expenses are an important thing to think about. So, let’s get into it.

Benefits of remote working

First off, let’s cover the benefits of remote working.

  • Flexibility - desirable to employees, remote working offers the freedom of being more in control of your working environment
  • Savings - the savings for businesses are undeniable. From every day office costs to lower wage expectations...there’s significant potential for economising
  • Less commuting - from an environmental perspective, remote working means less rush-hour traffic, leading to lower pollution and a happier planet
  • Productivity - working from home people are able to discover the best way of working, often leading to greater productivity and improved morale

But what about business expenses?

So, business expenses when working from home can get a little complex. If you use a home office, then you may be able to claim home office expenses. As ever, there are rules to this, which in their most basic form essentially state that purchases which are essential and necessary for your work. On top of this, you may also make reasonable claims for furnishing your office (e.g chair and desk). Now, the rules for business expenses differ as a sole trader and limited company. Let’s walk it through.

Sole traders…

As a sole trader, you have 2 option for claiming expenses:

  1. Claim simplified expenses for the self-employed

Or..

2. Work out your exact costs by calculating the proportion of business and personal use of your home (e.g electric bill costs)

You can discover which would suit you best here.

Limited companies…

By far the simplest way to calculate home office expenses as a limited company is to use HMRC’s published allowance in order to cover additional costs incurred from running your business from home. You can claim a flat rate of £6 per week (an allowance of £312 a year), and you don’t need receipts to prove expenses.

You can also rent your home office to your business in order to claim it as an expense. By doing this you can claim more than the flat rate of £312. This requires a rental agreement between you (the homeowner) and the limited company. Failure to do this paperwork will result in additional taxes...so don’t forget!

Learn more

This is just the tip of the business expenses ice-berg. In order to be a true master, you’d better download our E-Guide, where you’ll find all the most important secrets to understanding and making the most of business expenses.